Did you give up legal rights to get wireless?

Fine print in Cingular, AOL contracts at issue

By CANDACE HECKMAN, P-I REPORTER

Published 10:00 pm, Tuesday, February 28, 2006

After signing a one-size-fits-all, prewritten contract to get wireless service, a bank account or even a credit card, consumers are usually signing away their basic right to their day in court. And not many realize it.

Today, nearly every consumer in the country is bound by one of these provisions typically buried in lines of fine print or in the middle of a scrolling computer window. It's a clause requiring mandatory arbitration, one that essentially prohibits taking class action, or one that includes both.

But a couple of cases heard by the state Supreme Court Tuesday could slow that trend, at least in Washington.

In one case, justices could invalidate a contract provision that would ban consumers from filing any lawsuits within the state. In the other, the justices could stop companies from forcing consumers to waive their ability to join a class action.

By themselves, Doug Scott, Loren and Sandra Tabasinske, and Patrick and Janet Oishi knew that it wouldn't be worth the time and that they probably couldn't find a lawyer who would take on their cases.

As local customers of Cingular Wireless, the consumers found their carrier charging them small amounts for roaming and long-distance fees when they were supposed to be getting those services for free.

They presumed that if they were wrongly charged, many more of Cingular's 50 million customers might be in the same boat. So, the consumers sued the company in King County Superior Court on behalf of themselves and anyone else who might have been wrongly charged by Cingular.

But they had a problem. According to Cingular's standard contract, a clause that was circulated as a bill insert a couple of years ago, customers can take on the company individually but not as part of a class-action lawsuit.

It is now up to the state Supreme Court to decide whether Cingular, and consequently other companies, can subject its customers to such a ban, especially given that consumers do not have any say or negotiating power before signing its contracts.

Cingular's approach to arbitration is consumer-friendly, among the friendliest in the nation, said Anne Marshall, Cingular's regional spokeswoman.

Cingular pays for the arbitration, the procedure happens in the consumer's city, and consumers can recover their attorney's fees if they prevail.

Consumers also can go to small claims court, Marshall added.

But consumers would have to bring action individually, Marshall said.

That is the crux of the problem, said state Assistant Attorney General Shannon Smith, who submitted a brief on behalf of the consumers in the case.

"Even if arbitration were free, it's hard to imagine a consumer spending the time and effort to get a small amount of money back," Smith said. "It's not worth it to pursue."

As long as civil justice is not worth the effort to pursue, companies can abuse their customers with impunity, said Charles Delbaum, a staff attorney at the National Consumer Law Center in Washington, D.C.

Delbaum added that he believes that because these arbitration and class-action provisions have become so commonplace in American business, there is a culture forming in which large companies no longer have to ensure that their customers are not cheated.

In a separate case Tuesday, justices heard arguments from America Online, which has a clause in its contract that would force consumers to only take action in Virginia courts. The state of Virginia does not have a process for which consumers can bring class-action lawsuits to court.

The Washington Court of Appeals struck down that provision, saying the clause violated public policy.

AOL's lawyer, John O'Quinn, argued that consumers would be allowed to take class actions in federal court.

AOL's "terms of service" is also a take-it-or-leave-it contract. But those terms are even more unconscionable than an outright class-action ban, Smith said, because it essentially allows AOL to claim that Washington's consumer laws do not have jurisdiction over them, even though they do consumer business in Washington.

"Each of the individual consumers in this case has suffered damages that probably are less than $250. This is little -- if any -- incentive to bring an individual private action in Washington, let alone in Virginia," Smith wrote in another brief to the court.